03 Apr What is an Enrolled Agent (EA) and Why is this Designation Superior to Certified Public Accountant (CPA)
The Enrolled Agent (EA) is arguably the longest standing professional tax designation. Although at times overshadowed by other tax professionals EA’s are the only federally licensed tax practitioners who specialize in taxation.
The EA was established in 1884 when Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department. Only Enrolled Agents, Attorneys and CPA’s have unlimited rights to represent taxpayers. Enrolled Agents focus specifically on the US Tax Code.
To become a candidate for the EA designation one must pass the Special Enrollment Exam (SEE), a three-part examination covering Individuals, Businesses, and Representation, Practices and Procedures. If successful an EA candidate is then subjected to a rigorous background check conducted by the IRS. Once approved as an EA each person must fulfill annual continuing education requirements.
Empowered by the U.S. Department of the Treasury, Treasury Circular 230 provides the rules of practice for Enrolled Agents as well as certified public accountants, and tax attorneys; with oversight provided by the Office of Professional Responsibility (OPR).
Due in large part to the stringent testing required to become an enrolled agent and the requirements to maintain the license, there are only about 46,000 practicing enrolled agents.
Basically Enrolled Agents are federally authorized with licenses issued by the US Treasury enabling practice in all states in the United States. Alternatively CPA’s are state licensed and as such can only practice in the states where they are licensed.
Ultimately though the biggest difference is that the most astute CPA’s rely on the expertise of Enrolled Agents when seeking clarity on the US Tax Code.